2 Clusters: Working Definition“Geographic concentrations of interconnected companies, specialized suppliers, service providers, firms in related industries, and associated institutions (e.g., universities, standards agencies, trade associations) in a particular field that compete but also cooperate”(Michael Porter, 2000)

3 Clusters – not a new conceptMarshall 1890, 1920Industrial districts; Spatial dimensionAgglomeration economies; Externalities“something in the air”“When an industry has thus chosen a locality for itself, it is likely to stay there long: so great are the advantages which people following the same skilled trade get from near neighbourhood to one another. The mysteries of the trade become no mysteries; but are as it were in the air...” (A. Marshall, Principles of Economics, 1890)

11 Clusters & Smart SpecializationSmart specialization strategies are place-based strategiesClusters are an important element in smart specialization strategies (Commission Communication: Regional Policy contributing to smart growth, 2010)Value for money, i.e. smart R&D investment in the context of scarce public resources; prioritizing very clearlyOutward orientationUsers and customers: a new source of inspiration, involved directly in co-creating valueAn essence of smart specialization is to explore new cross-sectoral linkages that become growth drivers

12 Internationalization of ClustersInternationalization of the members of the clusterInternationalization of the cluster as a wholeDifferent types of internationalizationExports; Contractual Modes; Foreign Direct Investment (Subsidiaries)Networks; Resource/knowledge-based view; transaction costsThe cluster as a facilitator, an enablerfor initiatives that individual members cannot afford or develop aloneCollaborative networks: ‘punching above our weight’Can overcome liability of smallness (of firms/organizations & countries)

13 Internationalization of ClustersClusters helpOvercoming scarcity of resources and competences: accessing themParticularly important in clusters dominated by SMEs; linkagesCost/risk reductions (internationalization is no piece of cake!) & increase in potential gains; scale & specialization leading to increases in profitability and other performance indicatorsEfficiency gains, knowledge accumulation, visibility, brand/image: $$$Value added & created: help integrated solutions, synergiesWhat can/should the cluster do?What is the role of public policy?Enabler, simplifier, … or else?

14 Regional Cluster PolicyClusters may (or may not) arise spontaneouslyCan regional clusters be engineered?Starting clusters ex nihilo is very difficult; cathedrals in the desert...Example of a mainly market-induced cluster: Watchmaking cluster in the Swiss Jura (Maillat, 1995); the role of tradition in productionNowadays, an increasing number of OECD and emerging countries’ governments actively pursue cluster-based policy as a means to foster regional developmentAll government efforts to develop & support clusters in a specific regionFrom studies to setting up platforms, to establishing brokering and networking schemes to providing subsidies for cooperation

15 Regional Cluster PolicyLevels of policy – multiple, juxtaposedPolicies at national and regional, even city, levelSupranational programmes, e.g. Regional Innovation Strategies (RIS) programme of the European Commission, OECD’s Focus Group on Clusters, etcAn heterodox economic policy mix frameworkIn which relevant dimensions of economic policy at large are reformulated in terms of regional policy (Storper & Scott, 1995)3 main policy areas: regional, S&T, industrial/enterprise policyHence, cluster policy can hardly be isolated from other policy areasDifficult to assess how many resources have been committed to cluster policy – there’s no cluster policy per se?Benchmarking efforts – identifying and matching ‘best practices’Learning by comparingYet, successful examples cannot be transferred mechanically – ‘best practices’ more a source of inspiration than recipes for successful regional development

18 Regional Cluster Policy: RisksRelated to the use of a cluster approach generallyMore specific risks related to the design of such programmesPicking winnersInsufficient economic diversificationLock-inOver-reliance on key firmsJust throwing money to selected actorsLack of private sector involvement

19 Regional Cluster PolicyThe problem of evaluationLack of robust tools to measure whether or not such policies are successfulSome sort of monitoring component for ongoing funding decisions...Policy inconsistency and short-termism...Policy coherence within and across levels of governmentAny policy (strategy) is as good as its implementation